Meta, Amazon, Google, and other US firms are shedding staff with do-goody environmental, social and governance roles (ESG), research shows, in the latest sign of the backlash against what critics deride as ‘woke capitalism.’
More people left ESG jobs than started them for much of 2023, marking the reversal of a once-mushrooming sector, according to Live Data Technologies, which tracks the employment market.
US firms saw 3,071 ESG departures in December 2023, compared with 2,897 arrivals — a net loss of 174 roles, says the review of more than 360,000 US-based ESG professionals that was published in The Wall Street Journal.
Meta Platforms, Amazon, and Google had the largest ESG job outflows among US firms last year, the data show. The pattern was visible across other technology, financial-services and consulting firms.
Employees working at Facebook in Menlo Park, California. Parent company Meta and other technology firms have been shedding ESG staffers faster than others
Live Data Technologies reviewed data on some 360,000 US-based ESG professionals
Those firms have not commented on the exodus.
‘2023 saw a real cooling in chatter around ESG and in some quarters, quite a pronounced attack on what ESG was about,’ Joe Dubbin, managing director at Cripps Leadership Advisors, a recruitment firm, told the Journal.
‘It has certainly filtered through into the hiring requirements that we’ve been tasked to go do.’
ESG refers to business standards to promote socially-conscious behavior — for example, by investing in wind farms or cutting fuel consumption in transport to fight climate change.
The strategy gets more controversial when it guides funding to firms promoting diversity, equity, and inclusion (DEI) schemes, which irk conservatives, who say they help women and minorities by sidelining white men.
This has spawned a fractious debate about whether efforts to make society fairer and cut carbon emissions are in the strategic interest of investors, by mitigating the risks of climate chaos and social disorder.
Meta CEO Mark Zuckerberg (right) speaking with Google CEO Sundar Pichai (center) and others. Big tech firms have been waving goodbye to ESG workers
ESG refers to business standards to promote socially-conscious behavior, and can include investing in wind farms to fight climate change
Companies now face a pushback from investors, who have cashed out billions from ESG funds in favor of higher returns elsewhere, and from Republican politicians and conservative activists who eschew diversity-hiring initiatives.
Hiring for ESG positions has generally climbed since 2018, dipped in 2020 amid the coronavirus pandemic, and reached a peak in late 2021 Live Data Technologies says.
More workers started in ESG jobs last year than left them, at 40,884, versus 39,452, says the review of professional profiles, company websites and public employment data.
But that was a narrower gap than in previous years, researchers said.
Net inflows totaled 1,432, compared to an average of roughly 15,000 over the previous five-year period.
The sharp slowdown in hiring ESG workers is the latest sign of a cooling fad, as investors cashed out of socially-conscious funds.
Manages of funds following environmental, social, and governance (ESG) principles had a brutal year in 2023
ESG funds saw their worst year on record in 2023, with investors pulling $13 billion from US funds, a recent report from the financial services firm Morningstar says.
That multi-billion dollar exodus in the US more than offset the inward flows seen in Europe, dragging down the market globally.
In the fourth quarter alone, investors withdrew $5 billion from ESG funds, making the fifth straight quarter of net outflows, the report says.
According to Morningstar, investors exited ESG amid fears of poor returns, a hidden leftist agenda, and ‘greenwashing,’ or making a firm appear more environmentally friendly than it really is.
Investors walked away from ESG funds chiefly over lackluster returns.
Their performance improved from 2022’s lows, but they still lagged behind their traditional peers.
Investors pulled $13 billion from ESG funds in the US last year, a Morningstar report says
ESG funds target hydroelectric plants, like in this picture, and eschew dirty coal-fuelled power stations
The median sustainable large-blend equity fund gained 20.8 percent in 2023.
That’s lower than the 23.9 percent gains made by all types of funds overall.
Questions about the future of sustainable finance persist in the US as lawmakers from more than a dozen states, from Florida to Utah, try to fight the incorporation of ESG principles into business and investing.
The weak period for ESG funds has been notable given the massive growth they’ve posted in recent years.
ESG investing boomed in the pandemic, when lockdowns caused energy prices to fall and buoyed portfolios that shunned fossil fuels.
Those same strategies have floundered as lockdowns ended and economic activity resumed.
In the fourth quarter alone, investors withdrew $5 billion from ESG funds
ESG investors like wind farms much more than some rural residents, who call them an eyesore
The amount invested in US sustainable funds totaled $323 billion by the end of 2023, 12 percent lower than the record-setting amount invested in 2021.
The underperformance of ESG-focused funds strikes at the heart of a core argument of ESG: that investors are rewarded by investing in companies that aim to make the world a better place.
Advocates of ESG say it’s a smarter way to invest, because it factors in longer-term concerns, such as the economic chaos from climate change and ever-more freak weather events.
While many nations are ramping up renewables and scrapping carbon-belching power stations, the transition is not smooth and near-term shocks hinder progress, the report says.